In order to analyze economic aspects of Japanese employment practices, this thesis regards Japanese employment as a case of implicit employment contract.Chapter III clarifies the contents of training activity and the processes how productive workers are generated within the firm. Then, the employer limits the access to further training only to the employees promoted to managerial positions, providing the training opportunity for eligible employees at the right time.On-the-job training is analyzed with the help of the concept of job mobility chains. The quasi-transition matrices depict that there are two white-collar job mobility chains which correspond to different levels of education. The white-collar job mobility chains as a whole are wider than those of the blue-collar workers.Firm-specific work experience is not simply an accumulation of years of service, but is composed of carefully programmed career development paths. Well planned training programs and customary job changings contribute to develop versatile workers.Chapter IV reports the results of logit analyses on promotion probability for the male employees. The results suggest that competition for better jobs among the employees is significant and that personal merits override the effects of formal education.In the case of white-collar workers, the regression result implies that the firm minimizes training costs for promotion by slotting graduates from major colleges into a higher position.Chapter V analyzes the determinants of the individual earnings. The results show that the human capital variables as a whole are efficient predictors for variations in individual earnings. One of the most important factors the firm positively evaluates is in-service experience.Differences in performance of the individuals with similar human capital are reflected more in bonuses than in monthly basic salaries. This result suggests that the firm maintains flexibility in wage costs by administering bonuses.The findings show that firm does secure economic returns out of its care for employees. The essence of lifetime employment is nothing more than a long-term guarantee of employment which helps the firm develop its work force and fully reap the benefits of worker versatility. (Abstract shortened with permission of author.)